Byrne & Co v. Tienhoven & Co
The legal issue in this problem is whether the acceptance of the offer by Shum is made before communication of the revocation by Tam.
A statement of sales offering to a specific person by one body is considered as an offer. In this case, Tam has sent a letter to Shum offering to sell him a quantity of household goods for HK$10,000. Therefore, an offer by Tam has been made on 15th January. (the date that Shum receives Tam’s letter).
According to The General Rule, an acceptance must be communicated to the offeror. A contract comes into existence until or unless the acceptance is communicated. Moreover, the offeree must agree to all the terms of the offer, and the acceptance cannot be deemed or assumed.
In Household Fire Insurance Co. v. Grant (1879) 4 Ex.D 216, a letter of allotment of shares which is applied by Grant is sent to him but never reaches him. The Court held that the contract was completed on posting and Grant becomes one of the shareholders of the company. Similarly, in Adams v Lindell (1818) B & Ald 681, the defendants have sold the promised fleeces elsewhere when the letter of acceptance by the plaintiffs arrived. The court held that the contract was completed on the date that the plaintiffs send the letter of acceptance.
When acceptance is communicated by post, acceptance is effective at the time that it is posted instead of the time when the offeror receives the letter, this is called the postal rule. It is an exception to the general rule that acceptance must be communicated to the offeror.
Similarly, Shum has sent a letter of acceptance to Tam’s offer on 16th January, which is the next day of receiving the offer. With reference to the postal rule, the acceptance by Shum has been made on 16th January, and this leads to the formation of a legally binding contract, which states that Tam is legally bound to sell Shum the agreed amount of household goods, where Shum is also legally bound to pay Tam HK$10,000 for the household goods.
In Re
A statement of sales offering to a specific person by one body is considered as an offer. In this case, Tam has sent a letter to Shum offering to sell him a quantity of household goods for HK$10,000. Therefore, an offer by Tam has been made on 15th January. (the date that Shum receives Tam’s letter).
According to The General Rule, an acceptance must be communicated to the offeror. A contract comes into existence until or unless the acceptance is communicated. Moreover, the offeree must agree to all the terms of the offer, and the acceptance cannot be deemed or assumed.
In Household Fire Insurance Co. v. Grant (1879) 4 Ex.D 216, a letter of allotment of shares which is applied by Grant is sent to him but never reaches him. The Court held that the contract was completed on posting and Grant becomes one of the shareholders of the company. Similarly, in Adams v Lindell (1818) B & Ald 681, the defendants have sold the promised fleeces elsewhere when the letter of acceptance by the plaintiffs arrived. The court held that the contract was completed on the date that the plaintiffs send the letter of acceptance.
When acceptance is communicated by post, acceptance is effective at the time that it is posted instead of the time when the offeror receives the letter, this is called the postal rule. It is an exception to the general rule that acceptance must be communicated to the offeror.
Similarly, Shum has sent a letter of acceptance to Tam’s offer on 16th January, which is the next day of receiving the offer. With reference to the postal rule, the acceptance by Shum has been made on 16th January, and this leads to the formation of a legally binding contract, which states that Tam is legally bound to sell Shum the agreed amount of household goods, where Shum is also legally bound to pay Tam HK$10,000 for the household goods.
In Re